B-128635, AUG. 22, 1956

B-128635, AUG. 22, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 16, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR K. K. KIWA SHOKAI, YOKOHAMA, JAPAN, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA/S/92-557-FEC-9903 WAS AWARDED.

BY INVITATION NO. 92-557-S-56-596, THE QUARTERMASTER PROPERTY DISPOSAL AND MARKET CENTER, 8083D AW, TOKYO, JAPAN, REQUESTED BIDS--- TOBE OPENED FEBRUARY 9, 1956--- FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER ITEMS, 3,000 POUNDS OF SCRAP INSULATED COPPER WIRE, ITEM 4. IN RESPONSE K. K. KIWA SHOKAI SUBMITTED A BID OFFERING TO PURCHASE, IN ADDITION TO ITEM 1, THE SCRAP COPPER WIRE COVERED BY ITEM 4 AT A PRICE OF 151.60 YEN PER POUND. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF 136,000.00 YEN, WAS ACCEPTED AS TO ITEMS 1 AND 4 ON FEBRUARY 21, 1956.

IT APPEARS FROM THE RECORD THAT K. K. KIWA SHOKAI NOTIFIED THE CONTRACTING OFFICER BY LETTER DATED FEBRUARY 13, 1956, AND PRESUMABLY RECEIVED PRIOR TO AWARD OF THE CONTRACT, AS FOLLOWS:

"1) WE HAVE BEEN DEALING WITH YOUR QUARTERMASTER CENTER ALL THIS WHILE SINCE 1954 WITHOUT ANY TROUBLES UNDER YOUR KIND PATRONAGE AND WE HAVE BEEN VERY GRATEFUL FOR THAT.

"2) WE ARE VERY SORRY THAT WE HAVE MADE A CARELESS MISTAKE IN OUR BIDDING THE OTHER DAY AND WE BEG YOU TO BE KIND TO LET US CANCEL THE BID WE MADE FOR.

"3) WE WERE SUCCESSFUL ON OUR BIDDING WE MADE ON FEBRUARY 9, 1956 FOR ITEM NO. 1 AND 4, INV. NO. 596.

"4) AS FOR WIRE COPPER SCRAPS, 3,000 LBS IN ITEM NO. 4, WE HAD SENT ONE OF OUR CLERKS TO INSPECT THE SCRAPS PRELIMINARILY IN THE SCHIMMALPFENNIG CAMP, SENDAI AND WHEN WE WERE TALKING WITH HIM ON THE PHONE CONCERNING THOSE SCRAPS, THERE WAS SOME MISUNDERSTANDING BETWEEN US BECAUSE WE COULDN -T HEAR HIM WELL AND WE CARELESSLY WROTE 151.60 YEN AS UNIT PRICE IN THE BIDDING NOTE INSTEAD OF WRITING 51.60 YEN.

"5) YOU CAN EASILY JUDGE THAT THIS WAS CAUSED BY AN INNOCENT MISTAKE ON OUR SIDE IF YOU KINDLY CONSIDER THAT THERE IS SO MUCH DIFFERENCE IN PRICE BETWEEN OURS AND THE SECOND BIDDER.

"6) YOU ARE REQUESTED TO EXAMINE THE RECORDS OF BIDDING ON THAT DAY AND KINDLY TAKE OUR HARD SITUATION WE ARE PUT INTO YOUR GOOD CONSIDERATION, AND PERMIT US TO CANCEL OUR BIDDING WE MADE FOR ITEM NO. 4, INV. NO. 596. WE WILL BE VERY CAREFUL NOT TO MAKE SUCH A BIG MISTAKE LIKE THIS ANY MORE.'

THE BID OF K. K. KIWA SHOKAI ON ITEM 4 WAS IN THE AMOUNT OF 151.60 YEN PER POUND AND THE THREE OTHER BIDS ON THAT ITEM WERE IN THE AMOUNTS OF 50.50 YEN, 30.00 YEN, AND 7.10 YEN PER POUND. ORDINARILY, A MERE DIFFERENCE IN THE PRICES QUOTED FOR THE SALE OF SURPLUS MATERIAL OR SALVAGE PROPERTY WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR, AS WOULD A LIKE DIFFERENCE IN PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED TO THE GOVERNMENT. SEE 16 COMP. GEN. 596; 17 ID. 388, ID. 601; 28 ID. 261; ID. 550. HOWEVER, CONSIDERING THE FACT THAT THE SCRAP WARRANTY, PROVISION C OF THE SPECIAL CONDITIONS, SPECIFICALLY PROVIDED THAT THE PROPERTY WAS OFFERED AND PURCHASED AS SCRAP AND THAT THE PURCHASER WOULD DISPOSE OF IT ONLY AS SCRAP; THAT THE AVERAGE BID PRICE PER POUND ON SALES OF SCRAP COPPER WIRE DURING JANUARY 1956--- THE MONTH PRIOR TO THE MONTH DURING WHICH THE BIDS WERE OPENED--- WAS 53.88 YEN; AND THAT THE COMPANY'S BID ON ITEM 4 WAS APPROXIMATELY THREE TIMES THE AMOUNT OF THE NEXT HIGHEST BID ON THAT ITEM, WE CONCLUDE THAT THE ACCEPTANCE OF THE BID, IN THESE CIRCUMSTANCES, WAS NOT JUSTIFIED.

ACCORDINGLY, ITEM 4 OF CONTRACT NO. DA/S/92-557-FEC-9903 MAY BE CANCELLED WITHOUT LIABILITY TO K. K. KIWA SHOKAI, UNLESS DELIVERY UNDER THE ITEM HAS BEEN EFFECTED, IN WHICH EVENT THE COMPANY'S BID PRICE MAY BE CORRECTED TO ITS INTENDED BID PRICE OF 51.60 YEN PER POUND, WHICH IS STILL THE HIGHEST BID ON THAT ITEM.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTING OFFICER'S UNDATED STATEMENT, ARE RETURNED.